Palmerston North

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Taxes

Details about the local tax system, including income tax, GST, and tax identification (IRD number).

Sections

Overview of Taxes in New Zealand

New Zealand has a centralized tax system managed by the Inland Revenue Department (IRD). Taxes are consistent across the country, including Palmerston North, as there are no regional or city-specific taxes. Below are the main types of taxes applicable in Palmerston North:

1. Income Tax

Income tax is the primary tax for individuals and businesses in New Zealand.

For Individuals:

  • Tax Rates (2023):

    • 10.5% on income up to NZD 14,000
    • 17.5% on income between NZD 14,001 and NZD 48,000
    • 30% on income between NZD 48,001 and NZD 70,000
    • 33% on income between NZD 70,001 and NZD 180,000
    • 39% on income over NZD 180,000

  • PAYE (Pay As You Earn): If you are an employee, your employer will deduct income tax directly from your salary or wages under the PAYE system.

  • Self-Employed or Contractors: If you are self-employed or a contractor, you are responsible for calculating and paying your own income tax. You may need to file a tax return annually.

For Businesses:

  • Corporate Tax Rate: 28% on net profits.
  • Provisional Tax: Businesses with significant income may need to pay provisional tax in installments throughout the year.

Payment Procedures:

  • Tax is filed and paid through the IRDโ€™s online platform, myIR.
  • Payments can be made via bank transfer, credit card, or through authorized payment services.

Deadlines:

  • The tax year runs from April 1 to March 31.
  • Tax returns for individuals and businesses are generally due by July 7 of the following tax year unless you have an extension or a tax agent.

2. Goods and Services Tax (GST)

GST is a value-added tax applied to most goods and services in New Zealand.

  • Rate: 15%
  • Who Pays GST?
    • Businesses earning over NZD 60,000 annually must register for GST.
    • GST is added to the price of goods and services and is paid by consumers.
  • Filing and Payment:
    • Businesses file GST returns monthly, bi-monthly, or six-monthly, depending on their turnover.
    • Returns are submitted via the myIR platform.

3. Property Tax

New Zealand does not have a specific property tax, but there are related costs:

Rates (Local Council Tax):

  • Property owners in Palmerston North pay rates to the Palmerston North City Council. Rates fund local services such as water, waste management, and infrastructure.
  • Rates are calculated based on the rateable value (RV) of the property, which is assessed by the council.
  • Rates are typically billed quarterly, and payment can be made online, via direct debit, or at council offices.

Bright-Line Test (Capital Gains Tax on Property):

  • If you sell a residential property within 10 years of purchase (5 years for properties purchased before March 27, 2021), you may need to pay tax on any profit made. This is known as the Bright-Line Test.

4. Other Taxes

  • Fuel Tax: Included in the price of petrol and diesel.
  • Excise Tax: Applied to alcohol, tobacco, and certain other goods.
  • Customs Duty: Charged on imported goods above a certain value.

Tax Preparation and Support Services in Palmerston North

Palmerston North has several resources to help individuals and businesses with tax preparation and compliance:

1. Local Tax Agents and Accountants:

  • Deloitte Palmerston North: Offers tax advisory and compliance services for individuals and businesses.
  • BDO Palmerston North: Specializes in tax planning, GST returns, and business tax services.
  • CooperAitken Accountants: Provides tax return preparation, GST filing, and financial advice.

2. Community Services:

  • Palmerston North Community Law Centre: Offers free legal advice, including assistance with tax-related issues for low-income individuals.
  • Citizens Advice Bureau (CAB): Provides guidance on tax obligations and can help you navigate IRD services.

3. Online Resources:

  • Inland Revenue Department (IRD): The official website (www.ird.govt.nz) provides comprehensive guides, calculators, and tools for filing taxes.
  • myIR Portal: A secure online platform where you can manage your tax affairs, file returns, and make payments.

4. Workshops and Seminars:

  • The Palmerston North City Council and local business organizations occasionally host workshops on tax compliance and financial management for small businesses and individuals.

Local Considerations

  • IRD Number: To work or open a business in New Zealand, you must have an IRD number. You can apply for one online or at a local PostShop.
  • Tax Residency: If you are a new immigrant or visitor, your tax residency status will determine your tax obligations. Generally, you become a tax resident if you are in New Zealand for more than 183 days in a 12-month period.
  • Working for Families Tax Credits: If you have children, you may be eligible for tax credits to help with the cost of raising a family.

Tips for Managing Taxes in Palmerston North

  1. Keep Records: Maintain accurate records of income, expenses, and receipts for at least seven years.
  2. Use Tax Software: Tools like Xero or MYOB can simplify tax filing for individuals and businesses.
  3. Seek Professional Help: If your tax situation is complex, consult a local tax agent or accountant.
  4. Stay Informed: Tax laws and rates can change, so regularly check the IRD website for updates.

By understanding the tax system and utilizing the resources available in Palmerston North, you can ensure compliance and make the most of any tax benefits or credits you may be entitled to. Let me know if you need further assistance!